Your Strategy.

Accelerate Delivery Of Your Sustainability Ambitions


Major disruptions caused by ESG issues are impacting many industrial sectors, but also creating new revolutionary business opportunities for those with successful sustainability strategies. After decades where environmental and social issues were viewed as risks to be managed, we are now seeing disruptive transformations that are reshaping whole industries, with new entrants quickly becoming key players and risks that some companies will not adapt quickly enough to survive. The energy sector is transitioning from fossil fuels to renewable energy. Automotive companies are replacing diesel and petrol-powered vehicles with electric or hybrid, with new entrants quicky capturing massive share following behind Tesla and disrupting this global market (e.g., BYD and Geely). The food industry is transitioning from meat-based to plant-based diets and laboratory produced meats. In Life Sciences, Novo Nordisk have piloted circular business models for diabetes devices to enable recycling and reuse of components. FMCG and Luxury / Beauty companies are responding to the sustainability and ethical sourcing expectations of consumers through new product innovations.

The latest research has established a link between the ESG risk in a company’s supply chain and its future stock returns. Specifically, companies with the fewest supplier ESG incidents delivered excess returns of 6.77% annually relative to the portfolio of firms with the most incidents. These returns were generated in three ways. The first is supply chain stability. With fewer shocks and disruptions, companies can fulfil customer orders, optimise inventory, and operate more efficiently. The second is that responsible sourcing policies attract socially conscious customers and investors, and help companies avoid supply chain problems that can damage their brand and reputation. Third is how ethical sourcing can mitigate regulatory risk and reduce legal liabilities.

“Sustainability is transformational for business in the next decade. Every industrial sector is going to be ripped apart, changed totally in terms of its business model, products, services, value chain, purpose, strategy. In everything it does.” Mike Barry, former Director of Sustainable Business, Marks & Spencer

It Is Critical Now To Move From Good Intent To Action
From now on, there is an urgent need for companies to move from good intent to action on the ESG commitments they have published in response to pressure from consumers, investors, NGO’s, regulators, and other stakeholders. Reality bites as the implementation of sustainability strategies often presents huge challenges. Trade-offs need to be addressed between sustainability and business strategies. Performance metrics and roadmaps require updating so that progress towards ESG goals can be accurately measured and reported. Supply Chains need to be redesigned and new digital technologies implemented. Supplier risks must be mitigated, and new partnerships or alliances developed. Organisational cultures need adjusting to align with new ambitions and imperative for results.

“Growing and competing sustainably is not an option anymore, but an imperative.” Tanguy Pellen, Partner, Skarbek 

How can organisations achieve their growth goals, whilst also meeting increasingly demanding ESG commitments? At Skarbek, we embed sustainability thinking in everything we do and have a wealth of experience to support the development and successful deployment of ambitious strategies. Below are some initial practical steps that companies can take to accelerate successful delivery of sustainability ambitions.

  1. Strengthen Strategic Alignment
    • Revisit, strengthen and future-proof your ESG strategy. Be choiceful, selecting which ESG issues to address which have the greatest materiality for your industry and are key priorities of your most influential stakeholders.
    • Strike a balance between common and unique sustainability strategies. Common sustainability strategies address ESG issues affecting the whole industry and enable deployment of ‘best practice’, e.g., embracing Eco-Design practices, including moving away from plastics to more sustainable materials. These are necessary immediate steps to take, but often not enough to future-proof any company’s plans in the face of the acceleration of expectations (from the trade and consumers), and regulations. Unique sustainability strategies provide competitive advantage and may be difficult for competitors to match. As an example, the flooring company DESSO were one of the pioneers of the Cradle-to-Cradle approach. DESSO innovated using circular economy principles developing take-back programmes and products which use recyclable yarn that can be separated from the backing to enable it to be used over and over again. Implementing highly differentiated business and operational models can accelerate differentiation from competitors. Furthermore, as regulations tighten, having a circular economy-based model will put a company ahead of foreseeable compliance issues.
    • Develop a 3-year roadmap with robust performance metrics. Align the ESG and business strategies to ensure that environmental and social issues are integrated at the core of the business.
  2. Innovate More And Better In Service Of Your ESG Ambitions
    • Re-engineer your innovation processes in line with ESG goals and to develop solutions which address the inevitable trade-offs between the ESG and business strategies.
    • Consider a new operational model to unlock breakthrough innovation and exceed your sustainability goals. We often find that traditional market innovation, while enabling short term growth goals, is not sufficient to grow competitively in the face of consumer shifts. Operational tightening alone is often not enough to meet increasingly challenging goals. Find our recent case study here.
    • Leverage Skarbek’s Innovation Fitness Index. This diagnostic tool identifies all the factors driving innovation and quantifies how effective your organisation is across these factors to deliver profitable growth.
  3. Interrogate And Revisit Your Supply Chain & Procurement Operating Models
    • Redesign the supply chain to enable your ESG strategy which may include enhancing agility and resilient supply, or a circular business model to enable reuse or recycling of product. Realise the carbon reduction efficiencies resulting from the redesigned supply chain. Skarbek’s experts can support you to deploy supply chain 5.0 digital technologies (data science, AI, digital control towers) and practices which enable human-centric, sustainable and resilient supply.
    • Assess which intermediates and finished products require air freight and those that can be transported by sea to reduced carbon emissions.
    • Review the geopolitical and ethical risks identified with your suppliers upstream through to raw materials and transition to the alternative suppliers that align with your ESG strategy. Skarbek’s procurement experts support clients to deploy robust fully digital sourcing strategies aligned to the company strategy.
    • Develop the long-term partnerships with suppliers which bring new capabilities to deliver the ESG strategy. Alliances may also be required with competitors to work together on some of the biggest challenges facing an industry. Nestle and Unilever, for example, worked together to start addressing palm oil deforestation.
  4. Invest In Building A Sustainability Leadership Culture
    • Build new leadership capabilities in your organisation that are required to deliver your ESG goals. Focus on:
    – Resilience – needed as sustainability issues emerge and escalate quickly, requiring new plans to meet new requirements.
    – Influencing – The capability to build partnerships or alliances and work collaboratively with NGO’s, suppliers and competitors.
    – Being Future-thinking – The ability to create a radical vision of the future, but also to prepare a practical roadmap on how to get there.
    – Attracting and retaining key talent through communication of your compelling ESG strategy. Approximately 50% of the workforce are now Gen Y or Gen Z who are likely to have high expectations of their future employer’s ESG strategy.

The era of viewing ESG issues solely as risks to be managed is drawing to a close, ushering in a new era of opportunity for those bold enough to seize them. As disruptive transformations reshape industries, it is evident that sustainability is not just a moral imperative, but a strategic imperative for driving growth and competitiveness.

Companies with robust sustainability strategies and the ability to implement them effectively not only weather disruptions better, but are also now enjoying significant financial returns. The time to transition from good intent to decisive action is now. However, implementing sustainability strategies comes with its challenges, from navigating trade-offs between sustainability and business strategies to redesigning supply chains and fostering sustainability leadership. There are a lot of moving parts!

Skarbek stands ready to guide organisations through this transformative journey, embedding sustainability thinking into every facet of their operations. From strategically aligning ESG goals with business objectives, innovating with purpose, reengineering supply chains and cultivating sustainability leaderships, Skarbek can help companies unlock new avenues for growth while staying ahead of the curve. Be bold and turn aspirations into action – get in touch to speak with one of our experts today.